Pragmatic solutions needed for economy to recover

Pakistan's search for a path towards financial solvency has been partially fulfilled with the successful conclusion of plans for a sizeable loan from the International Monetary Fund.

The next stage of this effort requires the country to reach out to its prospective donors among the community of bilateral and multilateral supporters, to return on the road to full economic recovery.

On the face of it, this is a relatively straightforward effort which must be carried forward without any major blips. Once this package comes together, Pakistan will hopefully be in position to return to as relative normalcy as possible given the troubled prevailing times.

But the challenge ahead with reviving a largely moribund economy, requires more than just the IMF or global support to bailout the economy. Indeed, the challenge ahead is mainly about the revival of investor and business confidence in a country where many investors just don't feel secure.

Tackling the challenge ahead is indeed about three inter-related issues.

First, the government needs to take stock of significant obstacles faced by investors in the years they have dealt with Pakistan. These range from complaints of dealing with an unhelpful bureaucracy and loose ends in the legal system to the simple matter of unpredictability.

Electricity shortages

The electricity shortages which took place this year, widely hit the interests of many investors. These shortages also underlined the gaps in the overall infrastructure environment which make it very hard for any business person to project financial returns over a period of time, as much depends on factors well beyond their control.

Second, there needs to be very tangible evidence of the government itself being on a reformist path as it comes to grip with Pakistan's economic challenges. Recurring large budget deficits essentially mean that the government just doesn't have enough money to deal with key social services and developmental needs.

Earlier this year, a leading Pakistani economist put out a forecast which suggested that if the government was to shut down unnecessary operations of its own, it could save as much as Dh4.6 billion every year.

The claim came with the added proviso that such cuts could be made without any resultant effect on the quality of services delivered to ordinary consumers. Today, Pakistan is indeed in a bad fix. It is high time that the long overdue pruning of the government's finances takes place so that official revenue can be used far more productively.

Finally, the government needs to live up to the promise of finance minister Shaukat Tarin that there will be no sacred cows in Pakistan.

This essentially means that people who live well beyond their tax dues must finally be held to account for what they must pay to the official exchequer. Pakistan has a pathetic taxpayer base. The size of the community of tax payers is less than one per cent of the country's population of 165 million. This is unsustainable.

Earning respect

In the short term, Pakistan must begin taking action to fix some of the long term problems that it faces with implications for its economy. This is an essential first step to begin impressing friends and would-be friends that the country is serious about its economic reforms.

Seeking bailouts because Pakistan considers itself the victim, surrounded by mounting threats challenging the global hegemony, may be a way to win money. But that is certainly no way to win respect.

- The writer is a journalist based in Pakistan.